Correlation Between PT Gudang and Alfa Laval

Can any of the company-specific risk be diversified away by investing in both PT Gudang and Alfa Laval at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PT Gudang and Alfa Laval into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Gudang Garam and Alfa Laval AB, you can compare the effects of market volatilities on PT Gudang and Alfa Laval and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PT Gudang with a short position of Alfa Laval. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Gudang and Alfa Laval.

Diversification Opportunities for PT Gudang and Alfa Laval

0.0

Correlation Coefficient

PT Gudang  Alfa Laval

Pay attention - limited upside

The 3 months correlation between GGNPF and Alfa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Gudang Garam and Alfa Laval AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Laval AB and PT Gudang is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PT Gudang Garam are associated (or correlated) with Alfa Laval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Laval AB has no effect on the direction of PT Gudang i.e., PT Gudang and Alfa Laval go up and down completely randomly.

Pair Corralation between PT Gudang and Alfa Laval

If you would invest  3,700  in Alfa Laval AB on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Alfa Laval AB or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PT Gudang Garam  vs.  Alfa Laval AB

PT Gudang Garam

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Gudang Garam has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Gudang is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alfa Laval AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Laval AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alfa Laval is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Gudang and Alfa Laval

The main advantage of trading using opposite PT Gudang and Alfa Laval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Gudang position performs unexpectedly, Alfa Laval can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alfa Laval will offset losses from the drop in Alfa Laval's long position.

The idea behind PT Gudang Garam and Alfa Laval AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.